STANDARD CHARTERED BANK – “KITCHEN-SINKED?” – THROWN THE AGA IN AS WELL

 

STANDARD CHARTERED BANK – “KITCHEN-SINKED?” THROWN IN THE AGA AS WELL!

 

When Lord Mervyn Davies ran Standard Chartered Bank as CEO between 2001 and 2006 and then became chairman from 2006 until 2009, he must have purred like ‘Cheshire Cat’ for all but the last year. He was the ‘darling’ of the banking market. This mini ‘HSBC’ bank kept its nose clean and more or less avoided severe losses from sub-prime, derivative trading or from overly injudicious lending. However under the ebullient and supremely confident Peter Sands, who took over as CEO in 2006, the staff doubled to 70,000 between 2002 and 2008. Though the shares did dive from 1950p on 7th December 2007 to 655p on 20th February 2009, just before the introduction of quantitative easing, they did then rebound sharply to 1713p by 4th March 2013. Then it appeared that Peter Sands’s management team took their eye off the ball. They had a spat with US Department of Justice over money laundering allegations, which cost the bank $327m by way of fine. Then it all started to go wrong with huge exposure to Asia, where loan impairments started to grow. It was downhill all the way. The shares started to fall out of bed with Peter Sands resigning in April 2015. On the day Sands resigned and Bill Winters picked up the poisoned chalice the shares stood at 1063p. They fell to 482p on 15th December last year and rallied to 580p on 29th December 2015.

 

Today after a larger than expected loss of $1.5 billion was declared for the last year, with impairment charges up 87% to $4.06 billion and the prospect of as many as 15,000 jobs being lost, the shares fell 11% to 383p but have recovered to 412p (-5.53%). CEO Bill Winters has certainly ‘kitchen-sinked’ the balance sheet throwing out every single bad apple. There was confirmation that there will be no final dividend.

 

At 412p does this bank look an attractive buy, if you believe in tomorrow? If anyone can bring this bank round, Bill Winters can. The problem is that Standard Chartered Bank is no “HSBC” – It is one seventh the size! – Size is everything!

 

At 412p does this bank look an attractive buy, if you believe in tomorrow? If anyone can bring this bank round, Bill Winters can. The problem is that Standard Chartered Bank is no “HSBC” – It is one seventh the size! – Size is everything!

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: